Posted by Nick Day on 14 Aug 2012
Revised Guidance for Modified PAYE/International Assignees
As you may be aware HM Revenue & Customs (HMRC) are carrying out a major overhaul of how employers report details of their employees’ earnings and withholdings. Under the Real Time Information (RTI) system, rather than report details annually at the end of the year, the Pay As You Earn (PAYE) reporting will be made each time the payroll runs. Most employers will need to join RTI by April 2013, and all employers by October 2013.
Under existing “modified” arrangements, HMRC have special concessions in place for the following:-
- UK based employers hosting international assignees who remain employed by their home country employer and who are covered under a “tax equalisation” policy (broadly speaking an assignment policy which ensures the employee neither gains nor loses from a tax perspective as a result of the assignment).
- UK based employers who send employees to work overseas, where the employees become non-resident but remain subject to UK Class 1 National Insurance Contributions (NIC).
These modified PAYE and NIC arrangements are outlined in HMRC’s PAYE manual under EP Appendices 6, 7A and 7B.
As part of the RTI review HMRC have announced that these modified arrangements are to continue when reporting information in real time. However, having updated the PAYE manual with new versions of the appendices, HMRC have confirmed that any existing modified agreements cease to be effective from 6 April 2013, or earlier for employers who start sending PAYE information in real time before that date. HMRC are advising employers to apply for these new agreements early to avoid the busy year-end application period.
This is an area in which Tax Innovations have experience, so if you need assistance regarding the above please feel free to contact us on 01962 856 990 or firstname.lastname@example.org
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